The city manager of a Riverside County hamlet of 5,000 or so souls, paid more than a quarter million dollars a year along with some surprising and costly perks, got a bank employee fired for questioning his compensation at a city council meeting and submitting public records requests to document his suspicions, reports Bonnie Barron for Courthouse News Service. But it’s the bank and the officer who did the firing who are being sued—for wrongful termination in retaliation for the vice president’s exercise of his constitutional rights to speak freely and seek public information.
A former vice president claims his bank fired him because he dared to ask the Indian Wells City Council, at its public meeting, how much it was paying its public officials – a request that infuriated the city manager. The fired VP says the manager of the city of 5,093 was paid $283,020 in 2009, plus, apparently, lifetime medical coverage, an 80% pension for life, free golf and free car washes.
In his Superior Court complaint, Haddon Libby says the topic of compensation was an agenda item for the City Council the night he spoke, and that the topic was in the news, and on people’s minds, due to the scandalous salaries and benefits that had been revealed in the L.A. suburb of Bell.
Libby sued the First Foundation Bank, its corporate parent First Foundation Inc., and bank CEO Scott Kavanaugh, who also is vice chairman of First Foundation Inc.
Libby says he went to work with First Foundation Bank (FFB) in December 2010 as a regional director and senior vice president. He says the job was “especially critical to him because his wife was afflicted with cancer and was undergoing expensive ongoing cancer treatments.”
He claims the bank fired him because he dared to take an interest in city politics, and speak about it, on his own time.
“The real reason for the termination was to curry favor with the powerful local officials who had requested that plaintiff be punished for his legitimate inquiries into their excessive taxpayer-funded compensation,” according to the complaint.
Libby says that in addition to his usual marketing tasks, he was assigned to help the bank in its $17 million acquisition of Desert Commercial Bank.
Libby’s trouble, as he tells it, began with his question at an Indian Wells City Council meeting on Aug. 4, during which he commented on the hot topic of City Council compensation and benefits, which was an agenda item.
“During the public comment period, the mayor permitted plaintiff to address the City Council and plaintiff made the point that confidence in the City Council and city manager would be greatly improved if they disclosed all of their different sources of compensation, benefits, and other ‘perks,'” according to the complaint.
Libby claims he “repeatedly stressed that he was not accusing anyone of wrongdoing but was merely calling for full disclosure so that the matters could be debated openly.”
The complaint states: “In particular, at the August 4 meeting plaintiff proposed that the City Council and city manager make a full disclosure of the value of the following items of compensation:
“a. Special ‘VIP’ care privileges at the Eisenhower Medical Center;
“b. Medical coverage for life;
“c. Pension benefits at up to 80% of salary, plus cost of living increases, for life;
“d. Free golfing privileges for life;
“e. Free car washes;
“f. A special $14,700 fund for expenditure on discretionary expense items;
“g. Payments of $50-100 per meeting which are not reported as W-2 income in city records.”
The complaint adds: “The extent of accountability and transparency by local government has been an issue of intense public interest in California recently due to revelations concerning the abuse of power by municipal governments in the City of Bell and other localities. Overly generous and non-transparent salary and benefit packages for public officials have also become a leading issue and a matter of intense public debate in Indian Wells.
“According to the State Controller’s website, as of June 30, 2009 the City of Indian Wells had a population of just 5,093, yet its city manager received $283,020 in total W-2 wages from the city as well as substantial additional deferred compensation and medical benefits.”
Libby says he “did not receive any satisfactory response from the City Council or city manager during the meeting,” and so he filed a request for public records on Aug. 5, a Friday.
Libby adds that he posted this on his Facebook page that day: “I just calculated the amount Indian Wells will need to put away over the next five years to fully fund our city manager’s pension at a 6% growth rate on the money and a 3% inflation rate: $8,529,480. Does anyone but me think this is too high?”
The Facebook post apparently lit the fuse.
The following Tuesday, at 9:25 a.m., Libby says, “City Manager Greg Johnson sent an e-mail to plaintiff’s direct supervisor at FFB, CEO Scott Kavanaugh, stating inter alia that plaintiff’s ‘comments regarding my pension were an outright lie to the community’ and that ‘Mr. Libby must understand that such public discourse comes at a price.’
“Greg Johnson further states in this same e-mail to plaintiff’s employer that ‘As a representative of First Foundation Bank, Mr. Libby will be held accountable for his comments now and into the future.'”
Thirty-nine minutes later, “at 10:04 a.m., Scott Kavanaugh sent an email to plaintiff stating, ‘I received a phone call from Mr. Johnson. Needless to say by his comments below, he was not exactly happy with your comments. We should discuss.’ Kavanaugh subsequently acknowledged that he had several telephone discussions with an angry Mr. Johnson.”
Five minutes after getting the email from his boss, Libby says, he sent an email to Johnson, “stating inter alia: ‘Please get me the information that I requested immediately. I am trying to learn the truth. I was trying to calm things down.'”
Forty minutes later, at 10:49, Johnson replied: “‘If this is how you calm things down by lying in public about matters then I guess we will have a problem.’ Johnson further threatened to interfere with plaintiff’s employment by stating that ‘I believe a meeting with the mayor and mayor pro tem is in order’ and that ‘Mr. Kavanaugh is welcome to attend,'” according to the complaint.
It continues: “Later that morning Scott Kavanaugh informed plaintiff that he believed that Greg Johnson had violated the law against plaintiff and possibly the bank by threatening plaintiff’s employment. Nevertheless, Kavanaugh informed plaintiff that he should ‘let one of the retirees get [Johnson] as he appeared to be dirty.’ Kavanaugh further informed plaintiff to ‘tread carefully,’ and that he would not protect plaintiff as the Desert Commercial deal was too important to him and the bank as they needed the capital to grow. Kavanaugh further informed plaintiff that FFB would not continue his employment if he ran for city council, if he began a lawsuit against Mr. Johnson, or if he even met with Mr. Johnson.” (Brackets in complaint.)
The battle raged on into September.
On Sept. 7, Libby says, he received this message from Johnson: “‘I am in receipt of your public records request follow up after meeting with our Finance Director on your first request. I plan on providing a copy to our City Attorney for evaluation and advice as the information requested requires research which is beyond the public records requirements. I have copied the Mayor and Mayor Pro Tem to make them aware of your request. By this email, I have also copied Mr. Kavanaugh to keep him in the loop since you have chosen to post on Facebook and make public comments. I think this is fair.'”
Libby says that 17 minutes after he got that email, he wrote to Kavanaugh: “‘I don’t know why he [Johnson] keeps bringing you into this. I am not speaking publicly but researching something for my own edification. I am pretty certain that his continually involving you is a violation of law – in fact, I know it to be. Also, the reason he is being a bully is because this information appears to show a series of violations of law or tax evasion by him, the Mayor and Mayor Pro-tem. Remember that infamous time when I spoke publicly? Every single thing that I brought up was true and factual. The information sent to date backs this up.'” (Brackets in complaint.)
Libby followed up that email a few minutes later with another one, to three City Council members: “‘[T]his behavior by Greg is out of line given what I have asked for. To involve my CEO and put my career in jeopardy is wholly inappropriate and possibly a violation of law. As a city, we should be thankful and appreciative for residents that want to learn more about the city. The aggressive effort to impede my ability to ask questions seems to be an abuse of power and effort to impede freedom of speech.'” (Brackets in complaint.)
That afternoon, Libby says, he received another email from Johnson, which Johnson copied to Kavanuagh: “‘It’s difficult to trust a community banker like yourself. The proof is in your request and actions. Please don’t cry wolf when you choose to get involved in politics.'”
Less than 90 minutes after that email came in, Libby says, Kavanaugh informed him that the bank president wanted to see him the next day. From then on, he says, neither Kavanaugh nor the president, David Rahn, would respond to his email or calls. He was fired the next day.
The complaint continues: “The blatant political retaliation against plaintiff generated immediate outrage in the Indian Wells and Coachella Valley communities, which had been closely following the political debate over the compensation of local public officials.
“The public outcry drew media attention, including a series of stories by ‘The Desert Sun.’ As more facts became publicly known it was clear to all informed observers that plaintiff had been targeted for termination of his employment merely for seeking to uncover the truth concerning the compensation of public officials in his community.”
Libby seeks punitive damages for wrongful termination and defamation.
The Desert Sun reported that Johnson resigned his post of city manager on Oct. 6. Johnson is not a party to Libby’s complaint.
Libby is represented by Brian Van Vleck of Los Angeles.